Trials & Litigation

By Martha Neil

Aug 6, 2014, 10:00 pm CDT

A Pittsburgh investment banker says his private juvenile detention companies lost more than $100 million because of theft and illegal kickbacks paid to juvenile court judges by a Pennsylvania attorney convicted in the “kids for cash” case in Luzerne County.

So Greg Zappala is trying to freeze an award of as much as $200 million that the attorney, Robert Powell, and his law firm are on the verge of receiving in an environmental case, in the hope of recouping some of the money Zappala says his companies lost.

In a civil racketeering suit filed in federal court in Pittsburgh, Zappala asks that Powell, who is Zappala’s former business partner in the juvenile-detention venture, and Powell’s law firm be prevented from making any use of the pending $150 million to $200 million award until it can be applied against judgments related to the kids-for-cash case, the Pittsburgh Post-Gazette reports. The incoming fee concerns Luzerne County creosote litigation.

Earlier Post-Gazette and Tribune-Review articles give more details about the federal suit (PDF) filed by Zappala and his companies against Powell and other defendants last month. It contends that the lawyer unjustly enriched himself by tricking Zappala into funding the juvenile detention centers without disclosing behind-the-scenes financial transactions from which Powell benefited and seeks treble damages. In the process, Zappala’s reputation was damaged and he and other defendants were hit with “crushing debt and litigation costs,” the suit contends.

The articles don’t include any comment from Powell or his legal counsel. His law license was suspended under his plea deal, the Times Leader reports.

Two juvenile court judges who admittedly took some $2.6 million in bribes in exchange for helping the private detention facilities are serving hefty federal prison terms. Meanwhile, civil litigation over the kickbacks and detentions is ongoing. Families of children sent to the facilities often say their children were sent there for no good reason, and that they were not given fair opportunities to present their side of the case before being sentenced. The state’s top court agreed, vacating thousands of rulings.

Robert Mericle, a real estate developer who was involved in the payments, also cooperated with authorities. He took a plea in 2009 and was sentenced to 12 months earlier this year.

Zappala was not accused of any criminal wrongdoing, and he was dropped in 2009 as a defendant in related civil litigation, as the Citizens’ Voice reported at the time.

He is the brother of Allegheny County District Attorney Stephen Zappala Jr.